Consumers cut down

Market analysts say they are flabbergasted at the continued price climb of popular food items while the cost of producing them has dropped since the middle of last year.

Supermarket chains are now in the spotlight, despite their insistence they are doing everything in their power to drop prices, something not reflected in the record annual profits of many with the Competition Commission's announcement last month that it would investigate Pick n Pay, Woolworths, Spar and Shopright Checkers, as well as Massmart and Metcash.

The commission said public concern over alleged anti-competitive behaviour, collusion and abuse of market dominance prompted the investigation.

But while consumers watch the blame game play out as supermarkets shift the responsibility for rising costs to producers, producers to middle-men for packaging and transport costs, and middle-men back to supermarkets, many are having to count their pennies.

“Our food costs have increased dramatically,” said East London family of five mum Susan Birch. “I don't even do a month's shop anymore because it's too astronomical. Now I buy weekly and just what we need.”

The family has cut back on red meat.

“Food is one of our major expenses,” said Birch. “The government should step in and keep the costs of basic food items low. For people living on the bread-line, it must be incredibly tough.”

Former Weekend Post Style Force finalist Ntombekhaya Vungayi, 23, who lives in Uitenhage with her family, said sky-high prices had dampened their weekly shopping trips.

“We have to limit our grocery shopping. Instead of red meat, we buy (cheaper) chicken. We have cut out buying junk food except for special occasions.”

The National Agricultural Marketing Council (NAMC), established by the government to monitor food prices, has launched an investigation of its own into why prices are taking so long to come down despite production costs having bottomed out.

Although farmers charge almost R2 less for maize used for a 5kg maize pack, receive 42c less for the wheat used for a loaf of brown bread and 10% less for the milk they produce compared to a year ago, prices on all three items have risen substantially.

“We are busy with investigations and discussions with supermarket chains to try and find out why prices haven‘t been coming down sooner,” said Professor Andre Jooste, a senior research manager at the council.

“The lag between commodity prices (dropping) and the reduction in retail prices is four to five months, but in this case it has been much longer.”

The good news, though, is prices could begin to drop even faster from next month, Jooste said.

“In some cases food prices have started dropping and by August we could start to see a downward movement in some of the major foods such as bread, maize, sunflower oil and meat,” he said. “We might be seeing cases of deflation, which will see food prices start to drop towards the end of this year.”

According to a recent NAMC quarterly food price report, only a few items have started to show a slow shelf-price drop. They include:

• Wheat products such as bread, cake flour and pasta, which have dropped an average 0.71% since January and 15.57% since April last year;
  
• Maize products, which have dropped 5.31% since January, but have risen 6.33% since April last year;
  
• Sunflower products like sunflower oil and margarine, which have dropped 6.56% since January, but are still up 21.9% from April last year, and;
  
• Fresh vegetables which have dropped 10.42% since the beginning of the year, but still cost on average 22.6% more than in April last year.

Foods which continue to cost more include:

• Processed meats such as pork sausages and ham, which have gone up 4.06% since January and 25.65% over the past year;
  
• Tinned fish which has gone up 3.15% since January and 34.67% over the past year;
  
• Dairy products, including long-life milk and cheese, which cost 5.58% more since January this year and 10.77% over the past year.

Source: The Herald

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